Prospective new EPA rules on existing source greenhouse gas emissions National Lieutenant Governors Association Oklahoma City, OK July 19, 2013 Eugene M. Trisko Attorney-at-Law On behalf of American Coalition for Clean Coal Electricity

Today’s focus Potential impacts of EPA regulations limiting CO2 emissions from existing coal-based power generation sources Need for state input to EPA on the design of guidelines for state implementation of these rules

Existing source rule President Obama’s June 25, 2013, memorandum to EPA calls for the agency to propose existing source rules for the power generation sector by June 2014, with a final rule by June EPA has authority under Section 111(d) of the Clean Air Act to regulate CO2 emissions from existing sources through state “guidelines.”

NRDC’s proposal for Section 111(d) CO2 emission standards Coal generating unit standards would decline from average emission rate of 2,100 lb. CO2/MWh in 2012 to 1,500 lb. in 2020 and 1,200 lb in Implementation through broad-based emissions “averaging” with other sources, across states, with credits for reductions achieved by energy efficiency.

NRDC Projected Power Generation Capacity, lb CO2/MWh) COAL 223 GW COAL 298 GW COAL 319 GW En. Eff. 89 GW

Some issues NRDC proposal depends on huge investments in energy efficiency to achieve reductions, but has no regulatory driver. Standards do not reflect Section 111(d) requirements for source- specific “Best System of Emission Reduction” that is “adequately demonstrated.”

An alternative analysis of potential impacts Assume NRDC’s proposed CO2 emission rate limits with natural gas and renewables as principal alternatives. Use Department of Commerce state-level utility multipliers to estimate total direct and indirect jobs “at risk.” Estimate additional costs for natural gas using DOE/EIA AEO 2013 reference case delivered fuel price projections to 2040.

Projected generation changes 2020 (Million Megawatt-Hrs) Coal reduced by 17% to 60% from 2020 EIA base

Projected direct and indirect “jobs at risk” 2020 (000s)

Projected incremental cost of natural gas for coal displaced (Bil $)

Key messages These assumed industry-wide CO2 emission rate targets for existing coal-based generation are not achievable with existing technology, and are not consistent with Section 111(d) requirements. EPA guidelines for state implementation of existing source CO2 limits should reflect unit- specific emission reduction assessments, while providing compliance flexibility such as plant- wide averaging “inside the fence.”

Acknowledgments Thanks to Julia Hurst and NLGA for the opportunity to speak here today. Thanks to ACCCE for supporting this presentation. Views expressed are my own, along with any errors or omissions…